Wilful defaults: RBI reveals top 100; 2,664 corporates owe Rs. 1.96 lakh cr
A STAGGERING 2,664 corporates have been classified as wilful defaulters, failing to repay bank loans despite having the means to do so, according to the Reserve Bank of India (RBI). As of March 2024, these defaulters owed Rs 1,96,441 crore to the banking system, raising concerns about the financial health of India’s corporate sector and the potential risks to the banking system.
Replying to the Right to Information (RTI) queries filed by The Indian Express, the RBI named the top 100 corporate defaulters (excluding individuals and foreign borrowers) with Gitanjali Gems Ltd topping the list with a wilful default of Rs 8,516 crore as of June 2024.
The number of wilful defaulters had gone up from 2,154 in March 2020 to 2,664 in March 2024 and the amount they owed rose from Rs 1,52,860 crore to Rs 1,96,441 crore in the last four years, as per the RBI data.
The actual default and other liabilities claimed before the National Company Law Tribunal (NCLT) run into several thousands of crores by these companies. As per the RBI classification, a ‘wilful default’ would be deemed to have occurred if the borrower has defaulted in meeting their repayment obligations to the lender even when they have the capacity to honour the obligations.
A wilful default happens when the borrower has not utilised the finance from the lender for the specific purpose for which finance was availed, and has diverted the funds for other purposes, or siphoned off funds, or disposed of or removed the movable fixed assets or immovable property given for the purpose of securing a term loan without the knowledge of the bank.
Mehul Choksi, promoter of Gitanjali Gems, and his nephew Nirav Modi fled India after an FIR was filed when the loan fraud committed by the company was reported. The Serious Fraud Investigation Office (SFIO) recently dropped charges against 60 individuals and entities in the ongoing Gitanjali Gems fraud case.
During the audit it was alleged that the top management of the company was involved in diversion of funds causing criminal breach of trust with an intent to use the banks funds for personal gains possibly to tax havens.
Promoted by Rishi Agarwal and a major player in the shipbuilding sector, ABG Shipyard owed Rs 4,684 crore. During an audit by E&Y as mandated by SBI, it was allegedly found that the top management of the company was involved in diversion of funds for personal gains. Agarwal was arrested by Central Bureau of Investigation (CBI) in September 2022.
Third in the defaulters’ list, Concast Steel and Power owed Rs 4,305 crore to banks, according to the RBI. The Enforcement Directorate (ED) earlier this week arrested industrialist and owner of Concast Steel and Power Sanjay Sureka in connection with the bank fraud case. Jewellery worth Rs 4.5 crore and several foreign-made luxury cars were seized during raids at properties linked to him.
Promoted by HS Bharana, Era Infra Engineering has a wilful default of Rs 3,637 crore and comes fourth in the RBI list. Bankruptcy court NCLT approved the company’s acquisition by SA Infrastructure Consultants Pvt Ltd in June this year.
REI Agro has a wilful default of Rs 3,350 crore. ED had arrested Sandip Jhunjhunwala, Managing Director of REI Agro Ltd, in connection with a money laundering investigation against him for allegedly defrauding a consortium of banks in 2018. The company was once the world’s largest basmati rice processing and marketing firm during its peak period in 2013.
Promoted by fugitive Jatin Mehta, Winsome Diamonds has wilful default of Rs 2,927 crore. Mehta fled the country soon after the fraud was detected. Forever Precious Jewellery, also from the Winsome Diamond group, defaulted another Rs 1,692 crore. A London court had issued a worldwide freezing order in 2022. The Mehtas allegedly carried out over $1 billion fraud whereby proceeds of bullion advanced to two companies were diverted using shell companies around the world.
Hyderabad-based Transstroy (India) Ltd is owned by former TDP MP Rayapati Sambasiva Rao. ED, in its probe, found out that the infrastructure company floated several companies to divert funds raised from banks.
Kanpur-based pen manufacturing company Rotomac Global has wilful default of Rs 2,894 crore. CBI had registered multiple FIRS for defrauding banks and defaulting loan payment. The company, promoted by Vikram Kothari, sought funds from banks and allegedly diverted it to other accounts instead of making payments to suppliers and buyers.
Zoom Developers has wilful default of Rs 2,217 crore. ED had arrested Vijay Choudhary, promoter of the company, in connection with its money laundering probe in a bank loan fraud case. He allegedly floated 485 companies. (Source: The Indian Express)
